What is financial cancer?
DEBT.
Almost everyone has some form of debt, car financing, school debt and a mortgage are the most common. Now before we begin, there are two types of debt one needs to understand; good and bad.
Good debt; debt that pays for itself and earns you money.
Bad debt; It costs you your hard earned cash to pay for it, principle plus interest!
I am going to tell you my story of debt and how I removed it from my life. After I graduated high school I started business school at Okanagan collage in Vernon, BC. Being young and dumb and knowing all that is business I dropped out after my first year and decided to start my own company. Devoss Apparel was born, an internet market place for small clothing business to sell and market their locally made clothing. A $24,000 loan later a website and all the social media pages where up and running, I even had several business post their items on the site. I was happy, I had created something and it was working… but nobody bought anything, not a thing! SEO and Google ads did nothing to bring in the buyers. A year later my drive had all but died and guess what that loan was still there, quietly accumulating interest.
*Side note* Mark Cuban says, “Only fools borrow money to start a business.” Boy was he right, lesson learned the hard way.
Now this is where I tell you how I started the 5 year process to get rid of that nasty debt. At first I was paying the very minimum, did that for the first 3 years, always scratching my head at the principle balance at the end of the year, it felt like it never moved. That is interest for you!
Not until two years ago did I find out what I was doing wrong and finally started giving that debt a heavy dose of radiation and killed it completely! Here is how I did it.
First; speak to your lender and get better rates! You will be surprised what they can do for you if you ask! Ask for a lower rate so you can power through your loan.
Second; Pay as much as you can every month within reason, remember you need to live as well! If you can put any surprise money like tax refunds into it, do it, the bigger lumps you throw at it the less you pay in interest and the closer you are to freedom!
Third; Focus on the smaller debts first and remove them, a spread shot approach will take even longer, you may end up only paying partially for the interest and the debt will ballon on you. I have never had to deal with multiple debts, one was enough, so you may have to sit down and figure out what works best for you, remember you can always discuss with your lenders.
Forth; Do you really need what ever it is you are going into debt for? Life happens as well, we all understand that, but a $80,000 truck is probably not really worth it, unless it earns you money, then it is good debt, an asset!
The huge weight that is lifted of your shoulders when you write that last cheque is a truly amazing feeling! I have kept the letter saying my loan is paid in full and no balance is owed, I plan to frame it one day!
Getting rid of your bad debts will speed up your path to wealth and freedom!
*Bonus*
When you get to the finish line ask your lender to write and sign a letter saying the loan is paid in full, that protects you for any hidden or forgotten interest and charges they may try and collect from you at a later date. If they do come back for those fees you can politely show them the letter and tell them to be on their marry way.
I hope this helps you get rid of your debt, you will be surprised how quickly your bank accounts grow with its absence!
Do I regret taking that loan? Hell no, I learned a lot about starting a business and what debt can do to you!
Thank you for reading, if you have any questions please leave a comment!
MAGORIS 